I have an interest only mortgage – at present it is at a very low monthly rate – I am now in a position to repay this, but would it be worth investing it instead and where? it is for 50,000 £ and is over a ten year period.
Do a Cost-benefit analysis- What if the economy (stocks market) comes back but interest rates rise to 7% (or higher) how much will you make compared to how much you will be paying. Rates wont stay low forever.
Will your profits cover the difference?
Will you lose your investment and rates rise?
Get a fixed rate lock in @ 5.5% then invest.
Interest only mortgages used to be (in the good old days) reserved for sophisticated (aka "rich") borrowers who knew what they were doing (that is, they have people like me managing their money for them).
The loans should only be used for a limited set of reasons. Investing the difference when you don’t know what you are doing isn’t one of them. Pay the the mortgage down.
References :
Do a Cost-benefit analysis- What if the economy (stocks market) comes back but interest rates rise to 7% (or higher) how much will you make compared to how much you will be paying. Rates wont stay low forever.
Will your profits cover the difference?
Will you lose your investment and rates rise?
Get a fixed rate lock in @ 5.5% then invest.
References :
payed down 65% of mortgage